Islamic Finance Principles - Key Economic Values and Financial Rules

Sep 2, 2026

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Islamic finance is presented through core economic principles derived from the Quran and applied to financial governance and growth. The text emphasizes equal rights, fair distribution, social equity, and sustainable advancement through investment tied to societal interests. It explains prohibitions of riba, elimination of profit without liability, and restrictions on haram sectors, alongside rules requiring real transactions, risk–loss sharing, contractual justice, and money treated as a technical tool rather than a hierarchical asset. It also includes zakat and qard-hasan for welfare, plus financial institution charity accounts, concluding with project evaluation indicators such as NPV, IRR, and payback period.

LanguageEnglish

CategoryHealthcare

FormatPDF

Pages16

Reading Time40 min

AccessFree to download

| № | Element | Advantage | The source | | --- | --- | --- | --- | | 1 | Equal rights | The mean level of material well-being, attaining individual and familial necessities | 4:5 (Quran) | | 2 | Fair distribution | Reducing poverty and prevent excessive accumulation of wealth in the hands of a few individuals. | 17:83 (Quran) | | 3 | Social equity | Horizontal justice of individuals | 8:29 (Quran) | | 4 | Advancement
and economic expansion | Investing in a sector of the economy that meets the interests of society and avoiding additional savings | 62:10 (Quran) | | 5 | Creating wealth | Wealth supports life, and it must be used effectively | 2:188 (Quran) | | 6 | Financing based on real assets | A strong and stable economy that is resilient to financial shocks and crises | 30:39, 2:278, 3:130, 2:276, 4:161, 2:275 (Quran) | | 7 | Interest (riba) prohibition | A crucial aspect of economic growth is the sustainable development of the real economy, which aims to prevent a disconnect between debt creation and wealth creation | 30:39, 2:276,
4:161, 2:275,
3:130, 2:278 (Quran) | | --- | --- | --- | --- | | 8 | Elimination on returns
on nominal
transactions | Islamic finance is exclusively based on genuine transactions, with the real transaction mechanism facilitating the direct transfer of money supply to commodity markets | 4:161, 30:39 (Quran) | | 9 | Elimination of financial gain without liability | It is imperative to maintain a balance between liability and benefits, ensuring that profit is not detached from risks. It is essential for both parties involved to have equal rights and obligations in order to achieve symmetry | 11:85 (Quran) | | 10 | Speculation
and (garar)
uncertainty
prohibition | The creation of profitable economic endeavors, which are founded on sound reasoning and tangible assets, is emphasized in Islamic finance. Participants have a responsibility to honor their contractual commitmentsand uphold the integrity of their promises | 17:34, 5:1 (Quran) | | 11 | Sharing of loss and profit | The business activity is based on joint nature and partnership | 4:135, 4:29 (Quran) | | 12 | Partnership and Risk sharing | Dealings and transactions are based on justice | 9:24, 2:279 (Quran) | | 13 | The concept
of money as a
technical tool | In terms of its function, money serves solely as a medium for facilitating transactions. Each unit of money holds the same value as any other unit, with no distinction or hierarchy among them. The worth of money is determined by its ability to measure and represent the varying values of different goods and services. | 6:165, 20:6, 24:33 (Quran) | | 14 | Restriction
on funding
prohibited (haram) enterprises | Haram businesses financing is prohibited. For the morally and physically healthy society creation | 2:168, 90:91 (Quran) | | 15 | Financing that focuses on the needs and welfare of society | The poverty reduction instruments such as zakat and qard-hasan. | 9:13, 22:41 (Quran) | | 16 | Special charity accounts | Islamic financial institutions’ clients regulation and the special accounts for charity | Shariah Resolutions, fiqh and hadiths | | Note: The authors’ own [4][5][1] | | | | | | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | | --- | --- | --- | --- | --- | --- | | Sales Revenue | 75,796.00 | 76,175.00 | 105,502.00 | 110,777.90 | 116,316.79 | | Sales Costs | 8 260.34 | 8 829.21 | 12,228.46 | 12,839.88 | 13,481.88 | | Gross profit | 67,535.66 | 67,345.79 | 93,273.54 | 97,938.02 | 102,834.91 | | Adm.expenses | 15,632.53 | 16,752.58 | 23,202.33 | 31,778.17 | 44,012.76 | | Oper. expenses | 3 977.78 | 3 437.78 | 4 761.32 | 6 594.43 | 9 133.29 | | Cap. expenses | 46,428.60 | 0 | 0 | 0 | 0 | | before tax, profit | 1 496.75 | 47,155.43 | 65,309.89 | 59,565.42 | 49,688.86 | | Income tax | 44.90 | 1 414.66 | 1 959.30 | 1 786.96 | 1490.67 | | Profit | 1 451.85 | 45,740.77 | 63,350.69 | 57,778.46 | 48,198.19 | | Note – Authors’ own estimation | | | |

FAQs

What economic values does the document link to Islamic finance?

It connects Islamic finance to equal rights, fair distribution, social equity, and sustainable economic advancement through socially aligned investment.

How does the document describe the rules that prevent riba and speculative risk?

It states that riba is prohibited and that financial activity must rely on genuine transactions, remove returns on nominal transactions, and avoid speculation and uncertainty.

What approach does the document use to evaluate a financial/social project?

It provides multi-year financial figures and key performance indicators including NPV, IRR, profitability index, and the project payback period, then reports socio-economic efficiency measures.

Sep 2, 2026

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